Business Strategy of Sainsbury’s: A Comprehensive Analysis

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Business strategy

Table of Contents
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given organisation and its strategies...............................................................2
M1 critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................4
LO2..................................................................................................................................................6
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
M2 critically analyse the internal environment to assess the strengths and weaknesses of the
organisation’s internal capabilities structure and skill set...........................................................9
LO3................................................................................................................................................10
P3 Applying Porter’s Five Forces model evaluates the competitive forces of a given market
sector for an organisation...........................................................................................................10
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................11
LO4................................................................................................................................................13
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................13
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................15
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions..............15

Conclusion.....................................................................................................................................17
References......................................................................................................................................18

LIST OF FIGURES
Figure 1: PESTEL Analysis of Sainsbury.......................................................................................3
Figure 2: VRIO Model for assessing internal capability of Sainsbury............................................8
Figure 3: Forces specified under Porter Model.............................................................................10
Figure 4: Bowman Model and its positioning strategies...............................................................13

LIST OF TABLES
Table 1: SWOT analysis of Sainsbury.............................................................................................6

Introduction
The present report has provided the role of business strategy in the success of any organisation.
The report has presented the effective way of developing a business strategy so that an
organisation can enhance its competitive position among its rivals. The effective strategic
decisions require analysis of internal and external strength of the organisation so that the lacking
areas can be identified and improved. This report is presented in the context of Sainsbury, which
is a leading retail supermarket that offers more than 30,000 groceries and other products through
its stores in the UK as well as Ireland. In addition, Sainsbury has online home delivery services
that attract more than 90% of UK customers towards it. To ensure quality services and products,
it has employed more than 150,000 employees.
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LO1
P1Applying appropriate frameworks, analyse the impact and influence of the macro environment
on a given organisation and its strategies
Goals and objectives of Sainsbury
Sainsbury put its customers at the heart of everything, and therefore it makes all possible effort
to provide the best shopping experience. Hence, the set goal of Sainsbury is to deliver healthy
eatable items through the distribution of quality food. The mission of Sainsbury is to be the first
choice of every shopper for food. This mission is attained with the objective of delivering
outstanding quality to the customers and quality services at a reasonable price (Sainsbury, 2019).
The prime objective of Sainsbury is to acquire a competitive position in the market with the help
of building trust and loyalty among customers towards Sainsbury by making available innovative
and quality food products at its different stores in the UK.
Stakeholder Mapping
It is the process that helps to identify stakeholders that are impacted by the proposed action of
the Sainsbury. After identification of such individuals, their level of engagement and interest is
evaluated, and accordingly, categorisation is done (Stakeholder Mapping, 2019). For example,
the project of a Sainsbury to bring technological change within its stores to serve effective
services to the customers require stakeholder mapping that ultimately leads to high satisfaction to
the stakeholders and enhanced performance.
Analysis of macro environment (PESTEL Analysis)
This analysis helps the Sainsbury to identify external factors that may influence the business
practices of the organisation. Following are the major external factors come under this analysis
are:
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Figure 1: PESTEL Analysis of Sainsbury
Political Factors: Sainsbury operates its business through different stores in the UK are Ireland;
hence, the political changes within these areas highly influence its operational activities. For
example, Brexit in 2016 has brought high uncertainty within the UK economy that results in
devaluation of the pound, high inflation, etc. All these uncertainties result in lowering of
consumer purchasing power and negatively impacted the sales of Sainsbury. However, the
corporate tax is lower in the UK that helps the Sainsbury to save money and offer its products at
an affordable price (Thompson and McLarney, 2017).
Economic Factors: These factors include inflation rates, exchange rates, unemployment etc. that
impact the functioning of Sainsbury. For example, the fuel prices are rising in the UK that
impacts the supply chain of Sainsbury and resulted in high cost of final products. Another
example is of rising unemployment within the UK that positively affect the large supermarket
like, Sainsbury, as there will be no difficulty to find out the workforce for its different outlets.
Socio-cultural factors: the objective of Sainsbury is to deliver healthy food to the customers at a
reasonable price. There is an increasing preference of customers towards healthy and hygienic
products that offer wide opportunities to the Sainsbury in attracting customers. In addition, most
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of the people now choose to buy food online or through convenience stores and hence, this
affects the grocery sales of hypermarkets adversely. However, Sainsbury has also invested in
online sales and convenience shops that lead to improved sales and customer base (Sainsbury
SWOT and PESTEL analysis, 2018).
Technological Factors: Sainsbury is a big retail supermarket and therefore, it requires
continuous improvement in its technology to ensure effective business management. Also,
technological factors help the organisation to remain competitive in the supermarket industry.
For example, online shopping facility to the customers require constant technological
improvement that bring good shopping experience to the shoppers and stick them with the
Sainsbury.
Environmental Factors: Nowadays most of the customers demand organisation to adopt ethical
practices along with environmental concern regarding the use of recycled materials. The
environmental trend exerts the pressure to the retail food organisation, like, Sainsbury to manage
their inventory and products with minimised wastage of resources. In addition, Sainsbury can
also package their products with paper or recycled material to face the challenging
environmental factors (Molthan-Hill, 2017).
Legal Factors: UK government has provided a legal and regulatory framework to which
Sainsbury is required to comply on a mandatory basis. For example, a new tax law regime in
which the UK government has specified that supermarket is required to reduce the sugar by 20%
by 2020 that are selling under their own brand.
M1 critically analyse the macro environment to determine and inform strategic management
decisions
Sainsbury intends to invest in setting up of more supermarket stores and convenience store so
that its healthy products can be easily by every individual nearby its location. Hence, this
requires strategic decisions and planning to be made to ensure long term success. Before taking
any decisions, stakeholder identification is essential to analyse the impact of decision making on
individuals. In addition, PESTEL analysis can help the Sainsbury to identify the major changes
required to meet out the micro factors prevailing in the business environment (Molthan-Hill,
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2017). This requires integration of internal policies with the external factors so that the overall
performance of Sainsbury can be improved. For example, Sainsbury can introduce a new feature
of chatbots in its online applications so that customer can easily interact and sort out their issues.
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LO2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
The competitive position in the market cannot be improved with only considering the external
factors, as internal factors also play a great role in the long term organisational success. To
analyse the micro elements, SWOT analysis is an effective strategy which includes identification
of a firm’s strength, threat, weakness, and opportunities.
Table 1: SWOT analysis of Sainsbury
Strength
 The online stores of Sainsbury offer a
competitive advantage against its rivals.
 The supply chain of Sainsbury is
excellent and therefore, delivers high-
quality products within a lesser time
period as a comparison to other
supermarkets.
 The strategic distribution mode of
Sainsbury ensures convenience to the
customers in choosing different
products.
 Sainsbury has acquired Argos, and this
has strengthened its position in the
market as it has helped the organisation
to conquer the non-food market. In
addition, the excellent digital channel
Weaknesses
 The stores of Sainsbury is located in the
UK and Ireland only, and this limits the
sale and growth of its business to a
limited market only.
 Sainsbury is lowering its prices day by
day that has reduced the trust rating of
customers from 27% to 23% in 2017.
 To meet out the heavy Argos losses
requires Sainsbury to utilise its
profitability
 Higher competition and inflation rate
are the major factors behind the
declining sales of Sainsbury since last
few years
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of Argos has enhanced the sales and
profitability of Sainsbury.
Opportunities
 The growing preference in UK society
regarding healthy food and drinks offer
growth opportunities to the retail
supermarket Sainsbury.
 Expansion of Sainsbury stores in the
global market
 Establishment of online grocery stores
and convenience stores may bring
future growth.
 Technological advancement bring the
competitive position
Threats
 Brexit has raised the inflation rates and
reduce purchasing power
 Easy entry in the retail market with new
innovative techniques and technology.
Internal capabilities analysis of Sainsbury (VRIO Framework)
VRIO is a strategic tool that helps Sainsbury to effectively understand the significance of
resources and accordingly build a competitive position in the market through necessary
improvements. Following are the factors under this framework:
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